Unemployment fund fix would slash benefits

Reform part of giant overhaul to make the system solvent.

State lawmakers are considering changes to Ohio’s unemployment compensation system that could usher in steep cuts in benefits and make it harder for jobless workers to get unemployment checks.

State Rep. Barbara Sears, R-Sylvania, introduced a bill this week that calls for cutting back the maximum number of weeks someone can collect unemployment to between 12 and 20 weeks, down from the current 26 weeks. The legislation also would impose tighter eligibility rules and bring back a provision that reduces unemployment checks for workers who are also receiving Social Security benefits.

Ohio’s unemployment compensation system has been in big trouble for several years as the taxes paid by employers weren’t enough to keep up with benefits paid out. State leaders have failed to agree on a fix for years. Sears said in her sponsor testimony that now that unemployment rates are low, Ohio needs to repair the system.

The fund went broke Jan. 12, 2009, forcing the state to borrow from the federal government to keep issuing unemployment checks. The state borrowed more than $2 billion and has had to pay interest on the loan since 2011.

The state still owes $775 million on the debt, which it plans to pay off over the next two years. Ohioans have already paid $218 million in interest on the debt.

Money flows into the fund from taxes paid by employers on each worker. The rate varies by employer, but it averages 3 percent on the first $9,000 each worker makes.

Sears’ bill would bump up the taxable base to the first $11,000 each worker makes for as long as the fund is below minimum reserve levels. Once levels bounce back, the taxable base would drop back to $9,000 per worker.

In the week ending Oct. 31, there were 49,274 Ohioans receiving unemployment insurance, according to the Ohio Department of Job and Family Services.

Policy Matters Ohio, a liberal-leaning think tank based in Cleveland, said while the system needs an overhaul to restore solvency, Sears’ plan isn’t the right one because it puts the burden on workers.

“Slashing worker benefits and lowering employer taxes is not a balanced solvency plan,” said Zach Schiller, Policy Matters Ohio research director, in a written statement. “This overhaul needs an overhaul if it is to meet the needs of the Ohio economy, as well as Ohio workers and employers.”

Tim Burga of the Ohio AFL-CIO isn’t a fan of the bill either. “It unfairly puts the burden of reform on the backs of the unemployed while employers will pay less overall,” he said. “The bill foolishly goes after the benefits of working people and does not represent sacrifice by all parties involved.”

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